A recent study from LIMRA, formerly knows as the LIFE Foundation, revealed that consumers are overestimating the cost of life insurance.
As life insurance can be a critical tool in planning for retirement or ensuring loved ones are financially viable in the event of a breadwinner's death, it's important to have all the facts about coverage. As life insurance is actually far less expensive than consumers think, it's likely that more people would consider this coverage as financial planning tool.
Of the 2,047 adults surveyed by LIMRA, ages 18-75, the primary reasoning for not getting life insurance coverage, cited by 86 percent of individuals, was because it was too expensive. However, LIMRA asked how much a $250,000 term life insurance policy would cost a healthy 30-year-old and the median estimate by individuals under 25 was $1,000. LIMRA noted that as this estimate is nearly 10 times the actual cost, it remains alarming how much consumers are overestimating the cost for life insurance. Moreover, nearly 20 percent of the respondents believed the cost for that policy was more than $3,000.
"Our findings showed an astounding lack of awareness about the true cost of life insurance," said Todd Silverhart, corporate vice president of LIMRA Insurance Research. "Yet, younger consumers are not alone in this misconception. "Overall, more than 80 percent of Americans we surveyed overestimate the cost of life insurance and this misconception hasn't changed much in recent years."
Here are some additional findings from the survey:
- Of the respondents under 25, 43 percent are very or extremely concerned with their ability to pay for medical expenses, 38 percent are worried about dying prematurely and 36 percent are concerned about paying for a child's education.
- Thirty-one percent of all the respondents believe they would feel a financial impact within one month if a breadwinner were to pass away.
- Of the respondents, 65 percent believe they need life insurance, while 27 percent said they need more coverage.
Tips for buying coverage
The latest results of the LIMRA survey reveal that not only do more Americans need coverage, but it's actually cheaper than they think. As a result, many will want to start shopping for life insurance.
Here are some tips when searching for a policy:
- Get a quote for life insurance before you buy.
- Compare policies from multiple quality insurance providers.
- Talk with a financial professional about your own personal needs.